A Q&A with the billionaire who is helping business leaders find their bliss
Be Inkandescent magazine: What is the most important thing that entrepreneurs should know about growing their companies?
Ted Leonsis: The smaller the company, the more authentic and connected to customers your mission needs to be. The biggest and best tool you have to compete in the marketplace is your nimbleness and small size — so use it to connect closely with your customers.
Be Inkandescent magazine: You’ve often said that big companies suffer from the “theory of nines.” Can you explain what you mean?
Ted Leonsis: The message here is that the founder is a 10 who hires 9s to do the work. As the company grows, they hire 8s to help them, and eventually as the company grows it morphs into a place where the 2s are running the show.
That’s when things start to go awry. What they forget is that small companies need to have 10s and 9s to attract the employees that will keep them connected to the mission. That’s the only way they can hear clearly what the customers are saying and the only way they can respond. When a company loses touch with the people that helped build them to where they are, well, that’s when things start to fall apart.
Be Inkandescent magazine: What was the secret to your early success?
Ted Leonsis: It helps to be first in the market. That’s where I got lucky when after college I created a TV Guide-like product for the personal computer business. I was the first one that filled a niche. It also helped to have insight into what was happening in the computer business. That came from what I learned when I was a student at Georgetown University and had access to the early version of computers. So yes, there is luck involved. But it also takes the ability to know what customers want. I call these self-evident plays.
Be Inkandescent magazine: In your book you talk about the people and experiences that got you to the place you are now. If you could tell an entrepreneur anything that would help them avoid some pitfalls, what would it be?
Ted Leonsis: That is tough to say because I learned as I went along. I had great mentors along the way, and I made mistakes along the way. I just hoped they weren’t life threatening.
The bottom line is that there is no standard plan for success in a small business. And, unfortunately, the statistics are daunting when you look at how many companies start each year, and how many fail. But if you believe in your idea and are creative and clever, you have to try to make it succeed.
Be Inkandescent magazine: You’ve said repeatedly that America needs its small businesses to be successful. Can you elaborate on that?
Ted Leonsis: In the US, we need our small businesses because large, public companies, quite simply, are job shedders. They live quarter to quarter, and when times are tough they need to keep shareholders happy so they cut expenses — and that often means cutting people.
Small businesses hire people, and there is no better time to recruit talent than today. It’s also a great time to bring mentors into their orbits because corporations are letting some really great, experienced people go. Too often, big companies lose their way.
Be Inkandescent magazine: Are you referring to your experience at AOL?
Ted Leonsis: Most definitely. In the early years of AOL’s success, we never talked about our financials. We talked about our product, our customers, and how we could change the world. That is how we got to be so successful.
When we bought Time Warner in January 2000, our focus went from what mattered on main street to what mattered on Wall Street, and after that all we talked about was generating money to justify the acquisition. Our best people were now focused on the financials and that became the goal for the company.
But it wasn’t our original mission, and as soon as we got off of our mission, we could no longer chart how our customers felt about us. When you move from a purely business model, you start managing for your stock price and it’s like heroin. Sure, it feels really good at first, but then it kills you.
Be Inkandescent magazine: At the end of the day, what makes you happy?
Ted Leonsis: A lot of things. I was the Mayor of Vero Beach, where I have a second home. I have no other political aspirations.
Blogging really makes me happy. Today, I’ve already blogged 3 times. It’s a stream-of-consciousness of things I’m thinking and what I want to share.
But you have to have a thick skin. I get disappointed when someone writes a really snotty comment on my blog, then doesn’t leave his or her name so I can respond and have an intelligent conversation.
Just today that happened, and I asked my assistant if I might have this person’s email address so I can write them a personal email saying something like, “I read your comments and clearly there has been a misinterpretation of what I stated. If you are free I’d love to talk to you about it.” I sent it, and it turned out to be a fake email address.
As a blogger I put myself out there. As a person making a comment, you should do the same. Otherwise, my only option is to figure you have an agenda that is not authentic. So if I want to connect with you, and you lie, this isn’t really you.
Be Inkandescent magazine: Do you have any final words of wisdom for entrepreneurs?
Ted Leonsis: Yes. Know that a lot of what you’ve been taught is wrong. Jack Welch’s philosophy of “run it by the numbers, lay everybody off,” was ridiculous.
Companies that are breakout hits have corporate missions that go beyond their success. At Google, for instance, they allow employees to dedicate 20% of their time to self-expression and volunteering. I think that’s terrific.
Entrepreneurs like that should be celebrated. They are the heart and soul of our economy. So my message to small business owners is never give up, never quit. You are on the side of the angels.
About the authors
Ted Leonsis is an Internet industry pioneer who helped build AOL into a global phenomenon. He is a serial entrepreneur who has built and sold multiple successful businesses over three decades, culminating with the recent sale of Revolution Money to American Express. He owns the NHL’s Washington Capitals and other sports properties. He is an award-winning producer of documentaries, and the founder and chairman of SnagFilms. Originally from Brooklyn, New York, and later, Lowell, Massachusetts, he now lives in McLean, Virginia, and Vero Beach, Florida, with his wife and two children.
John Buckley is the author of the novels Family Politics and Statute of Limitations. He has held senior positions in three U.S. presidential campaigns, and has been the top communications executive at companies including AOL, where for six years he worked closely with Ted Leonsis. He is currently managing director of The Harbour Group, a strategic communications firm, and lives in Washington, D.C., with his wife and son.